Tag Archives: mortgage payment

“It’s a frightening statistic that 47% of Americans would struggle to come up with $400 to cover an unplanned expense. Yet nearly half of today’s workers are living paycheck-to-paycheck, with no financial cushion whatsoever, and a big part of the reason boils down to living beyond our means.”

There is no doubt that the mortgage process can be an intimidating and confusing process for the uninitiated. Let’s look at the situation: you are putting yourself into debt for the next 15-30 years, signing stacks of paperwork, and learning about new fees every day. In such a stressful environment it easy to make mistakes and the worst part is that you might never even know that you made a mistake.

In order to make sure that you do not pay for that one mistake over the next 30 years it is important to do your homework and gain an understanding of the mortgage process. Below you will find a list of some of the more common mistakes that mortgage brokers and lenders see every day.

Beginning with the 2012 tax bill (due in April 2013), the state Franchise Tax Board will require property owners to break down their property taxes into deductible and non-deductible portions.

As many as 5 million California property-tax payers who have been taking the entire amount they pay off their state income taxes could see a major cut in their deductions when they file next year.

Beginning with the 2012 tax bill (the one due in April 2013), the state Franchise Tax Board will require property owners to break down their property taxes into deductible and non-deductible portions.

That means property owners who have been deducting their Mello-Roos fees — often running into thousands of dollars — will no longer be able to deduct those or any other special assessments like vector control or mosquito abatement.

In Orange County, 181,550 of the county’s approximately 900,000 parcels were subject to Mello-Roos in the 2011-2012 tax year, according to the auditor-controller’s office. They were billed a total of $207.8 million.

The difference between deductible and non-deductible property taxes is not a new rule. Mello-Roos fees, which pay for roads, schools, fire stations and other public facilities in new developments, have not been deductible from state income taxes since the legislature authorized the special assessments 30 years ago.

Many property owners, however, routinely deduct the entire amount of their property tax bill from their state income taxes instead of only the parts that legally are deductible. Others just use the amount on the Form 1098 that their mortgage holder paid to the county tax collector on their behalf.

Until now the Franchise Tax Board didn’t to go after them. A new computer system being installed this year, however, will allow the agency to distinguish the portions of property tax bills that are deductible and non-deductible, said Daniel Tahara, a FTB spokesman.

He said the new scrutiny of property taxes is not due to any political pressure to increase tax revenues to close the state’s gaping budget deficit.

“Every year we look at areas of non-compliance and this happened to be one that came up,” he said.

Tahara said the agency is announcing the new rules now so taxpayers can make any adjustments this year for their 2012 state tax filing next year.

He said the FTB had planned to impose the new rules on 2011 tax filings due this April, but held off after getting “negative feedback” from tax preparers and the public.

Pat Yeckel, president of Canyon Tax and Bookkeeping Service Inc. in Rancho Santa Margarita, said that she and other tax preparers have known Mello-Roos and other fees weren’t deductible, but that clients usually don’t have the breakdown of their property tax bill.

It will be a particularly big deal for property owners in South County and other new developments where many of the public amenities were paid through Mello-Roos districts.

“This is going to be a big pain,” Yeckel said, noting that just getting the property tax paperwork can be a hassle.

Taxpayers will need a copy of their tax bills whether or not they pay their own property taxes or have them paid through their mortgage payment because they will need their parcel number in addition to the deductible/non-deductible breakdown for their 2012 state income tax filing.

For a full explanation of how the new deductible rules will work, CLICK HERE.

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About John A Silva

As your local real estate adviser in the area of San Diego County with over 28 years of experience, my goal is to provide you with relevant local housing market information, tips, and advice.

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